Systems Thinking – The key to public sector performance

Multiple masters, divergent agendas and conflicting priorities make measuring success a significant challenge for public administrators and politicians alike. With global and local economic climates performing below average and an ever-increasing demand for services, providing ‘more for less’ or ‘value for money’ has become a key focus driving reform. This has resulted in performance management tools becoming ever-important in moving towards a modern public sector

Based on our experience and research, I believe a systems approach to performance management will support leaders as they link government agendas with organisational and individual objectives. We have found that high performing government agencies are typically supported by performance management tools and systems in which managers at all levels of the agency have

Clear objectives focused on outputs and not activities

Transparent understanding of each person’s contribution to the wider organisation

Responsibility for specific results or outcomes

The public sector faces a number of unique challenges that make the process of building and implementing performance management systems and tools more challenging than within other sectors. The solutions developed must be able to reflect an environment of conflicting interests and varying stakeholders. This means any performance management solution is required to cover a much broader range of issues with executive but also political performance being brought to account.

Current public sector organisations must also undertake a paradigm shift of their understanding of performance management in order to realise more effective service delivery. Moving from traditional accounting focused metrics to metrics focused on how effectively outcomes are being delivered to the community is key. These outcomes are most valuable when tailored to form the link between performance and strategy.

This approach differs greatly from traditional performance management approaches as it shifts decision making responsibility about performance objectives down to individual agencies. Departments are allowed to self-determine how the strategic goals set by government will be met, the thought being that agencies closer to the action will be able to better determine how targets and ensuring the individual development of people. A similar system has been developed and applied in New Zealand to great success.

The first requirement for Department’s when designing appropriate performance management systems is to focus on establishing a clear understanding of what motivates teams and individuals. Traditional private sectors approaches have tended to lean towards the use of an extrinsic approach, where financial benefits and human motivators such as pay for performance are used. However, more commonly used in the public sector is the intrinsic approach, which sees team or individuals receiving rewards in the forms or recognition for achievements. This in turn can develop positive competitive pressure within agencies leading to better service delivery. Determining where an organisation sits across the four quadrants outlined in the table below is critical in assessing how to best build an effective performance management system

Figure 1: Performance management system qualities

Governments and public sector leaders need to move towards performance management systems that include multiple uncorrelated performance indicators which can be compared across sections of the organisation, or ideally, across government agencies. This requires robust, transparent and comparable data to be available across the sector. Implementing a systems based approach by linking strategic objectives to operational performance measures would enable agencies to tailor and measure performance and development of their people, while ensuring overall alignment to the Government’s strategy.

The following checklist details the key requirements to ensure an effective systems based performance management system:

Formulate a clear and coherent plan

Develop an explicit performance measurement strategy

Involve key users in the design and development phase

Rationalise the program / functional structure as a prelude to measurement;